Student Association For International Affairs

Official survey reveals China’s April manufacturing growth experienced a slowdown

Figures revealed that producer price inflation cooled during the month

Policymakers’ efforts to reduce financial risks in the economy weighed on demand

The National Bureau of Statistics’ official PMI fell to a six month low

BEIJING, China – The National Bureau of Statistics’ official Purchasing Managers’ Index (PMI) fell to a six-month low of 51.2 in April from March’s near five-year high of 51.8, reports revealed.

China’s manufacturing sector growth, official numbers revealed, slowed faster than expected during April, with producer price inflation cooling for the first time in seven months in the previous month.

Further, policymakers’ efforts to reduce financial risks in the economy weighed on demand.

Latest numbers revealed that China April official services PMI stood at 54.0, while it was recorded at 55.1 in the month of March.

Further, numbers revealed that demand weakened across the board and the biggest decline was recorded in the input price sub-index that fell to 51.8.

It was the slowest expansion since June last year.

The input price sub-index stood at 59.3 in March.

According to Zhou Hao, an economist at Commerzbank in Singapore, some of the pressures that the country’s manufacturers are facing are due to recent sharp declines in iron ore and onshore steel prices.

In a note, Zhou wrote, “We believe that this on one hand reflects that there is little improvement in underlying demand. On the other hand, the de-leveraging effort by the Chinese authorities, has started to work.»

The numbers revealed that the employment sub-index slipped to 49.2 from 50.0 in March while the raw materials inventories sub-index was unchanged at 48.3.

In the same month, growth in China’s services sector slowed slightly to 54.0, compared with the previous month’s reading of 55.1 – highest since May 2014.
Further, Zhao Yang, an economist at Nomura, said «downside pressures» remained.

«[We] maintain our call for a shallow slowdown through the course of this year.»

Beijing is currently facing scrutiny ahead of its National Congress this autumn.

The country continues to steer the economy away from relying on debt-fuelled investment, towards growth driven by consumer spending.